2023-04-29 05:43:00
While France thought it had reassured the markets by voting on pension reform, the rating agency Fitch downgraded its rating to “AA-“.
The international financial rating agency lowered France’s rating by one notch to “AA-” due to “public debt/GDP” which “remains on a modest upward trend”. The agency also cited recent “social movements”.
For Fitch, these social tensions should weigh on France’s ability to reduce the deficit and the debt while growth prospects are lower than expected.
The rating agency notes that France is in a “political impasse” and finds it hard to imagine the government being able to initiate new structural reforms. Thus, “social movements (sometimes violent) pose a risk to Macron’s reform program and might create pressure for a more expansionary fiscal policy or a reversal of previous reforms”, indicates the rating agency. in a press release.
Friday evening, Bruno Le Maire, Minister of the Economy, reacted via a press release. He regretted a “pessimistic assessment” of Fitch considering that the rating agency “underestimated the consequences of the reforms” in particular those of pensions.
After reaching 4.7% in 2022, the French public deficit should rise slightly this year to 4.9% before gradually declining from 2024, anticipates the government in its stability program published in recent days.
Debt reduction should experience a boost according to the government, with debt representing 108.3% of GDP in 2027, i.e. 4 points less than previously envisaged but still very far from the European objective of 60%. It was at 111.6% of GDP at the end of 2022.
1682754433
#Financial #markets #Political #stalemate… #Frances #rating #downgraded #Fitch #agency #due #social #movements
